With the Florida legislative session now underway, one thing that should demand policymaker attention is the notoriety of being named by the American Tort Reform Association as the worst state in the country for litigation abuse for 2017. The first New Year’s resolution that lawmakers should make is to reform assignment of benefits (AOB).

Florida’s Office of Insurance Regulation defines assignment of benefits as “a document signed by a policyholder that allows a third party, such as a water extraction company, a roofer, or a plumber, to ‘stand in the shoes’ of the insured and seek direct payment from the insurance company.”

For more than 100 years, AOBs have been around in Florida to help complete work done for a claim covered by the insurance contract — in other words, AOBs are used to help resolve insurance claims, not promote litigation. But as of late, plaintiff attorneys and service contractors have turned their intended use upside down, using AOBs not to settle claims but to generate lawsuits and increase their fees.

In 2006, just over 400 AOB lawsuits were filed in Florida. By 2016, that number had ballooned to more than 28,000 — a 7,000 percent increase. Insurers are in the business of working with their customers when they have a problem. Florida is a highly competitive marketplace, and if an insurer hopes to stay in business and grow, it needs to provide good customer service, especially when a claim is made. When that customer relationship is bypassed and assumed by a third party “advocate,” incentives shift away from the insurer-customer relationship and toward maximizing third-party payment and profit. If the insurer resists the third party’s new demand, a lawsuit is often the first instinct, not the last.

Caught in the middle, Florida’s policyholders are paying the price as AOB lawsuits and litigation expenses have dramatically increased. Before AOB abuse became commonplace in Florida, in 2014, the state had seen property insurance rate decreases (or no rate change) in 63 percent of insurer filings approved by the OIR. But by 2016, that number had completely reversed, and 73 percent of approved rate filings were for increases.

Even the state-backed property insurer Citizens Property Insurance is experiencing this problem. Today, more than half of all water-damage claims in South Florida end in litigation, according to Citizens’ president. As a result, Citizens raised rates by more than 10 percent in 2017, for the second year in a row. If the status quo persists, the OIR predicts that premiums from all insurers could increase across every county, every year, until 2022. In some counties, like Miami-Dade, that will mean policyholders could be paying almost $1,800 more per year.

Plaintiff’s attorneys and contractors will argue that AOB brings peace of mind to those whose homes have been damaged or destroyed. And, that was the original intent of AOB, until peace of mind was replaced by abusive sleight of hand.

Under current law, unscrupulous attorneys and contractors have every incentive to engage in frivolous litigation over their inflated fees. Florida lawmakers should resolve in 2018 to put Florida insurance consumers ahead of litigation abusers and restore AOB to its legitimate intent. To that end, lawmakers should act to discourage and prevent needless and abusive assignment of benefits litigation. In doing so, Florida can begin to shed its mantle as the worst state for litigation abuse.

Ron Jackson is the American Insurance Association’s vice president of state affairs for the southeast region.